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Arena Pharmaceuticals (NASDAQ: ARNA) has spent a dozen years working on developing a new drug with potential to help millions of people lose weight. Now U.S. regulators have had a chance to comb through detailed clinical trial results, and found it passed one of the two common standards for effectiveness of an obesity drug by a “slim margin.” Plus, regulators raised questions from studies in which rats on extreme high doses of the drug had higher rates of cancer. Shares of the company fell 37 percent to $4.31 at 10:15 am Eastern.

The rat studies, which I haven’t seen in the past two years of covering Arena, may have caused most of the worry in the market today. Female rats developed more malignant mammary tumors when they got a dose of the drug that was within a 7-fold higher than the proposed clinical dose, compared to animals taking a placebo, the FDA staff said. Male rats had an increased risk of the tumors when given a dose 17 times higher than recommended clinical dose. Rats on the drug also had increased rates of other tumor types, the FDA staff pointed out. Still, the FDA noted that there didn’t appear to be an excess risk of cancer in the Phase III clinical trials Arena conducted in more than 7,000 people.

The assessment came from the beginning of a briefing document written by FDA staff, prepared for an FDA advisory committee scheduled for Thursday. It’s a critically important meeting for Arena in at the FDA’s Endocrinologic and Metabolic Drug Advisory panel, in which panelists are expected to make comments and recommend whether Arena’s drug, lorcaserin (Lorqess), deserves a shot on the U.S. market.

The FDA panel’s recommendation is crucial to a small company like Arena, which has no products yet for sale in the U.S., and which has spent a decade of effort and raised about $1 billion to get to this point on the cusp of commercialization. Arena is jockeying with rivals like San Diego-based Orexigen Therapeutics (NASDAQ: OREX) and Mountain View, CA-based Vivus (NASDAQ: VVUS), who are all seeking FDA approval to start selling their products into the potentially huge market for new weight loss drugs. An estimated two-thirds of people in the U.S. are overweight or obese, although it’s unclear how many would opt to buy a new pharmaceutical. Investors will be watching the FDA panel’s comments and vote closely on Thursday, especially since Vivus failed to win a panel recommendation that many investors expected it would get back in July.

The Arena drug candidate has gone through some extraordinary safety monitoring, because of its potential to treat millions of people with a non-life threatening condition and because of the way it works. Patients were followed for two years to see whether the Arena drug caused any damage to the heart. The aggressive monitoring was required by the FDA, because Arena’s drug is designed to work in a similar way as Wyeth’s fen-phen combination did in the 1990s, before that drug was pulled off the market because it damaged heart valves. Arena’s candidate was designed to be more specific—to interact with an enzyme in the brain that controls feelings of fullness—without hitting the enzyme on the heart that derailed fen-phen.

Failing to distinguish between those two targets can be costly. The company that marketed that drug, now part of Pfizer, set aside $22 billion for legal settlements, as Forbes’ Matt Herper pointed out yesterday.

Data to support the Arena application came mainly from a pair of clinical trials that enrolled more than 7,000 people. The major finding of one of those studies, called Bloom, was that patients lost an average of 5.8 percent of their body weight on the drug, compared with 2.2 percent body weight loss in the placebo group. A second trial, Blossom, showed a similar result.

The FDA generally considers that a weight loss drug should be five percentage points better than a placebo—so on that score, Arena came up short. But Arena has told investors it has another line of argument in favor of its drug. The FDA has said it also wants to see twice as many patients lose 5 or 10 percent of their body weight on a new drug, and that’s where Arena is hanging its hat. About two-thirds of patients who stayed in the Bloom trial a full year lost 5 percent of their body weight, compared with one-third who did as well on a placebo. More than one-third of the patients on the drug lost 10 percent of their body weight, which was almost three times the rate among those on a placebo.

The FDA staff, in its briefing document, noted the secondary benefits patients experienced when they lost weight. “The weight loss observed in the lorcaserin-treated groups was associated with improvements in systolic and diastolic blood pressure, lipoprotein lipid levels, fasting glucose and insulin levels,” the FDA staff said.

In terms of safety, the FDA summary said that 2.66 percent of patients who got a 10 milligram, twice-daily dose of lorcaserin in the Bloom trial had a heart valve issue, compared with 2.35 percent who took a placebo. Both groups of patients, those on the drug and the placebo, had a 1.99 percent incidence of heart valve defects in the other major Arena trial, known as Blossom, the FDA said.

About twice as many patients on the Arena drug had some sort of neuropsychiatric effect, with dizziness, fatigue, and abnormal dreams among the most common. FDA reviewers said there didn’t appear to be a higher rate of depression-related adverse events on the Arena drug. The FDA staff did bring up some rare adverse events that could come up at Thursday’s discussion.

“Memory impairment, disturbance in attention, amnesia and other cognitive-related adverse events were reported infrequently overall; however, three times more subjects treated with lorcaserin 10 mg [twice daily] reported these types of events compared with subjects treated with placebo,” the FDA staff said.

The FDA’s deadline to complete its review of the Arena product is October 22.

Rats showed malignant tumors from lorcaserin only at 57x and 84x the human dose, far above the 25x threshold the FDA uses. So is any rat cancer at any dose an “adverse event” even though it is nowhere near statistically significant relative to existing FDA guidelines? If so, every new drug will have to report a dose-limiting response of cancer or death in rats, because that’s how animal trials are done. I’m not sure why that is relevant to investors.
It’s hard to see how fibroid tumors could be considered an “adverse event” because there is no relationship between fibroid tumors in rats and in humans.